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Getting a Handle on the CPO Equation


Certified pre-owned (CPO) vehicles cost more than comparable used cars without the certification. That much should be obvious, but just how much more do they cost?

Car search engine company iSeeCars.com has done research that reveals that certified pre-owned vehicles carry an average premium of $722. Autotrader’s data shows that searches for certified vehicles are up by 12 percent for the year (May 2014-May 2015), confirming the increased popularity of such programs. Still, the question remains: When it comes time to buy, is the right choice a new car, a certified pre-owned car or a used car without certification?

The actual value of the certified pre-owned designation is difficult to determine. Program features may include an extended basic warranty, a powertrain warranty, roadside assistance, routine maintenance and a comprehensive inspection prior to sale. It’s also possible to assume that a certified pre-owned vehicle may retain some additional value when the time comes to sell again. According to a 2012 article by GMAuthority.com, an independent website that reports on GM, General Motors values its certified pre-owned program at $2,135 per vehicle. Given that the data from iSeeCars.com shows that Chevrolet certified pre-owned vehicles carry an average premium of $430 and Buick vehicles carry an average premium of $447, those two programs deliver a decent value to buyers who crave the peace of mind that a certified pre-owned designation conveys.

Fiat Chrysler Automobiles (FCA) has done even better than GM, with its Jeep ($289), Dodge ($346) and RAM ($354) brands carrying the lowest average certified pre-owned premiums, and Chrysler ($426) coming in not far behind. Subaru ($378), Honda ($380) and Mazda ($403), along with the previously mentioned Chevrolet and Buick, round out the list of nine brands with average certified pre-owned premiums below $500.

Digging further into the iSeeCars.com results, the nine brands with the lowest average certified pre-owned premiums did not include any luxury brands.

Autotrader calculated the popularity of certified pre-owned searches on the website by brand, and discovered little if any correlation between these searches and iSeeCars.com’s data. The top 15 searched certified pre-owned brands were:

  1. Chevrolet
  2. Ford
  3. Toyota
  4. BMW
  5. GMC
  6. Honda
  7. Mercedes-Benz
  8. Audi
  9. Dodge
  10. Nissan
  11. Lexus
  12. Jeep
  13. Cadillac
  14. Volkswagen
  15. Subaru

Several luxury brands (BMW, Mercedes-Benz, Audi and Lexus) are popular searches among certified pre-owned vehicles on Autotrader.

Comparing certified pre-owned programs is challenging for buyers and data miners alike. Several factors must be considered:

  • Bumper-to-Bumper Warranty: Does the certified pre-owned program extend the vehicle’s basic new-car warranty with factory support?
  • Powertrain Warranty: Does the certified pre-owned program extend the vehicle’s powertrain warranty with factory support?
  • Roadside Assistance: Is this included with the certified pre-owned program? For how many months and/or miles?
  • Routine Maintenance: Is this included with the certified pre-owned program? For how many months and/or miles?
  • Vehicle Inspection: What was inspected, and is a report available for the results of the inspection?
  • Deductible/Limit: Does the certified pre-owned program include a deductible or limit on warranty claims, repairs and/or roadside assistance?
  • Transferability: Are the features of the certified pre-owned program transferable to the next owner if the vehicle is sold within the warranty/benefit period?

Check Autotrader for CPO program reviews to get our specific evaluations and recommendations on individual manufacturer programs. When shopping for a used vehicle, give certified pre-owned programs and vehicles as much scrutiny as you would give a vehicle from a private party, and make your decision based on hard information tempered by gut instinct. Choose the vehicle you can afford that has the lowest mileage and best condition, and trust that your research won’t steer you wrong.

 

Jason Fogelson
Jason Fogelson is a freelance automotive journalist and editor. He has covered cars, trucks, SUVs and motorcycles for a variety of print, web and broadcast mediaHis first book, “100 Things for Every Gearhead to Do Before They Die,” came out in 2015. He also writes music, theater and film criticism, in addition to the occasional screenplay. Jason lives near Detroit, Michigan, with his wife,... Read More about Jason Fogelson

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